Ind-Ra maintains positive outlook for dairy sector

India Ratings and Research (Ind-Ra) has maintained a positive outlook for the dairy sector for the next financial year as the industry is witnessing strong growth both in demand and prices.
"We expect the dairy sector's market size to increase 15.6 per cent year-on-year in FY16. Milk production is forecast to grow at 4.6 per cent y-o-y in FY16.
"The agency expects the dairy sector to remain one of the focus areas of the government to improve the economic well-being of rural population," Ind-Ra said.
Therefore, the government programmes and policies aimed at supporting the industry are expected not only to continue, but also be strengthened, the rating agency said.

It expects the government to continue to support the dairy sector, especially cooperative sector, in the form of capex and technological improvements.
The Indian dairy industry grew steadily to 138 million tonnes in FY14, according to data from Department of Animal Husbandry, Ministry of Agriculture.

'Operation Flood' and other initiatives by the state and central government to improve the livestock productivity and increase the availability of quality fodder helped India to become the world's largest milk producer, it said.
It expects the dairy industry to expand to Rs 5,54,690 crore in FY16 from Rs 3,59,256 crore in FY13.
The milk production is expected to increase to 151 million tonnes by FY16 from 138 million tonnes in FY14.

The government is striving to expand the milk production to 180-200 million tonnes by FY22 to meet the growing demand and address the nutritional requirement of country.
Ind-Ra estimates that if the industry continues to grow at FY14 levels of 4.21 per cent, it will be able to achieve the set target.
Further, it said that despite a collapse in the global milk and dairy product prices in 2014, domestic prices have remained firm.
"We do not expect the rising dairy product prices to affect demand for milk and milk-based items, such as cheese and butter, in light of the changing dietary habits and rising disposable income of the Indian population," it added.